They can’t all be Apple and Google, but we keep looking

In yesterday’s Revolution Investing, I noted that as of this week, Apple and Google, respectively, are the two most valuable companies in the U.S. That means, I’ve owned the two largest market-cap stocks in the U.S. for more than a decade, having first bought Apple at $7 and Google the day it came public at $95 in the open market after it started trading.

With the Revolution Investing approach, and the whole point of the newsletter, is that we’re trying to find the next Apple and Google like I did the first Apple and Google. I added a couple new names that have some parallels to my biggest — and the market’s current biggest — winners in this week’s edition. But let me be frank, as all my haters in my Markewatch blog comments section are apt to point out, that I’ve been wrong a lot along the way too.

For example, I remember about 10 years ago, I was also short Research In Motion because I thought that its platform would eventually succumb to better and more open platforms. That was when Apple’s main growth engine was its relatively still new iPod and I was writing about how someday Apple
/quotes/zigman/68270/delayed/quotes/nls/aaplAAPL would some day turn the iPod into a cell-phone enabled “iMiniMacBookPro for Your Pocket.”

With the stock at $12, I was heading into RIMM’s earnings report already down more than 10% on my short position and feeling the pain which only intensified as I listened to the company’s earnings call. RIMM was on fire and absolutely blowing away every subscriber and profit and growth metric that Wall Street had for the near-term back then, I cringed as the stock hit $14 in after-hours trading. I moved to cover the shares I had sold short and it wasn’t until early after normal market hours opened that I was able to get out entirely of my short, with an average cover price of nearly $15 a share.

Certainly, I had some nice “offsetting” profits in my other telecom and tech long positions which were also on fire at the time, but any good trader/investor knows that limiting losses is key to long-term outperformance. And I felt sick over a 30% loss on that trade in just three months’ or so time, as I recall.

A couple years later I didn’t feel so stupid when I got a distressed email from a telecom analyst who had just realized that RIMM had passed AT&T in market cap at some point. The stock was now near $50 and on its way to $100. I eventually re-shorted as Android and iPhone finally created the exact dynamic I’d long expected to see the Blackberry platform suffer, as it lost critical mass. I even had RIMM as a short in Revolution Investing as long-time subscribers will recall and covered it on the way down before it eventually became the BlackBerry
/quotes/zigman/19622165/delayed/quotes/nls/bbryBBRY stock everybody loathes today.

The other day I wrote what turned out to be a very controversial and widely distributed article called, “Twitter is doomed to a Blackberry-like future.” I wonder if I’ll look like and feel like an idiot for having written those words for the next few years as Twitter rides this ongoing bubble-blowing bull market and its own momentum to wild new highs and valuations for shareholders.

To be clear, I’m not short Twitter and am not looking to short Twitter anytime soon — if ever (I’ll see where the stock and the company’s roadmap take us). And part of the reason why is exactly because of the lesson I learned when I’d shorted RIMM for the right reasons years too early.

Will Facebook triple again from here as it has in the last year and someday be one of the most valuable companies in the world? Will Twitter? Will the App Revolution stocks crash and burn after this bubble pops? Is there still more bubble and/or simply higher valuations for most tech growth stocks ahead for the near-, the mid- and/or the long-term? Those are my trader’s deep thoughts for today. See ya’ tomorrow. And in 10 years.

Cody Willard writesRevolution Investingfor MarketWatch, posts the trades from his personal account atTradingWithCody.com, which is not affiliated with MarketWatch, and is the largest shareholder in Scutify‘s parent company, Wall Street All-Stars. At time of publication, Cody was net long Apple, Google and Facebook. Follow Cody on Twitter attwitter.com/codywillard.

About The Cody Word

Cody Willard writes the Revolution Investing investment newsletter for MarketWatch and posts the trades from his personal account at TradingWithCody.com He is the founder of WallStreetAll-Stars.com and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and is on the University of New Mexico Alumni Board. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. Cody, a former hedge fund manager, and his stock picks and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.